Company Law


There are two kinds of limited companies:

-Private companies : a Private company has "Ltd" after its name. These companies are generally smaller than public companies but not always. Shares in a private company can only be bought and sold with permission of the Board of Directors. Shareholders have limited liability. These companies do not sell their shares to the wider public. Shares can only be traded with the permission of the Board of Directors.

-Public companies : a Public Company has "Plc" after its name. The shares of Public Companies are generally available through the Stock Exchange. These companies are owned by shareholders, who may purchase further shares or sell the ones they own to the general public on a Stock Exchange.

A Private Limited Company is a separate legal entity and shareholders benefit from a limited liability. So, their liability extends as far as the capital they invested, and nothing more.

Sole Trader

If somebody wants to operate a business for profit, he can choose from a number of different trading entities. The simplest and commonest form of business structure is a sole trader because there is no complex paperwork.

With this structure, the business and the owner are the same person in law. As you and your business are one and the same thing – you are personally liable for all the debts of the business.


A partnership is a business that has between 2 and 20 partners. Theyown the business together. The partners should sign a written partnership agreement to set up the Partnerships. This document is made out by the partners and witnessed by a solicitor.

One advantage of this structure is that the responsibility of ownership is shared. All the partners are personally liable for business debts, regardless of how or by whom these debts have been incurred.

However, in 2001 this traditional partnership has been altered so that some large partnerships can have limited liability.

This new structure has some of the advantages (and disadvantages) of both a company and a partnership. For example, it is a separate legal entity and contrary to traditional partnerships, it can continue despite the resignation or death of some members.

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